The day of reckoning for Sears Holdings appears to be getting closer.

The day of reckoning for Sears Holdings appears to be getting closer.

Recent stories in the Wall Street Journal and The New York Times say some big clients of ESL Investments, the hedge fund run by Edward Lampert, who orchestrated the merger of Sears, Roebuck & Co. and Kmart in 2005, are pulling their money out, in part because of dissatisfaction with the retailer’s anemic performance and diminishing ­prospects.

Investors represented by Goldman Sachs who placed some $3.5 billion with ESL seven years ago now want their money back. The hedge fund has reportedly responded with a combination of cash and stock.

The shrinking size of ESL puts more pressure on Lampert — who has been Sears Holdings’ chairman and largest shareholder since the company assumed its current form, and became chief executive officer in early 2013 — to transform Kmart and Sears stores into compelling destinations for consumers. The fact that Lampert and the four CEOs who worked for him failed to resuscitate the company over the better part of a decade offers little reason for confidence in current management.

During the Lampert era, Sears Holdings has hemorrhaged sales and stores. In 2005 the company had volume of $54 billion and some 3,400 retail outlets; at the close of last fiscal year those figures stood at $39.85 billion and 2,063. Net income has zigzagged from red to black and back again. Last year the retailer posted a loss of almost a billion dollars.

Given that track record and the waning of investors’ confidence, the company would seem to have two choices: continue to divest assets — Sears Holdings has already spun off some divisions and sold some of its best stores — or finally get serious about the fundamentals of retailing as they apply to today’s omnichannel marketplace. The hope here is that Lampert will decide that two of America’s iconic retail brands are worth revitalizing and commit the resources needed to bring that about.

To make such an investment work, he will first have to recruit an experienced retail leader who understands the mass market, where Kmart and Sears fit within it, and what must be done to turn the company around. Without the guidance of a true retailing visionary, the company’s long, sad decline will continue, and Sears and Kmart will be relegated to the history books.